A professional fund manager - or a team of managers - makes the decisions about what to buy and sell within the fund. Those decisions should follow the investing philosophy laid out in the fund's prospectus (a document that you should read and agree with before investing).

Individual mutual funds are usually part of a large company known as a mutual fund "family," such as Fidelity, T. Rowe Price or Vanguard. Each family typically has lots of fund options to choose from. To make your life easier, you can stick with one good fund family and buy different funds from within it. In fact, if you're investing in a company-provided retirement plan, such as a 401(k), you may have only one family's funds available to you.